Memecoins, a truly profitable investment? The hidden risks

▲ Memecoins ©

While memecoins are attracting investors with high returns, a warning has been issued that they are actually high-risk assets carrying extreme volatility and structural risks simultaneously.

According to the cryptocurrency specialized media Watcher.Guru on May 2nd (local time), memecoins, assets originating from internet culture, have the potential for rapid short-term surges but also carry a very high risk of rapid decline, embodying a 'high-risk, high-reward' structure. The media reported that they are particularly characterized by an extreme expansion of price drops when market conditions shift to a bearish trend.

As a prime example, Dogecoin (DOGE) has fallen by over 85% since reaching its all-time high of $0.7316 in May 2021. Shiba Inu (SHIB) also showed a similar trend, plummeting by over 92% from its peak of $0.00008616. The media pointed out that this pattern is repeating in most memecoins.

The problem is the lack of practical utility. Memecoins are often based on community and online culture rather than technical functionality or ecosystems. The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) jointly defined memecoins as 'digital collectibles' and explained in a February 2025 announcement that these assets may not qualify as securities.

Investment risks do not end there. Memecoins are frequently exposed to fraud cases like "rug pulls." This involves developers attracting investment, then shutting down the project and absconding with the funds, leading to repeated investor losses, which has been highlighted as a problem.

The media emphasized that while memecoins can offer high returns in a bull market, investment decisions must always be based on thorough prior research and risk awareness. It warned that approaching them with only the expectation of price increases could lead to significant losses.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*